West Africa's oil potential among best in the world

Created: Thursday, 16 July 2015 06:22

West Africa's small oilfields are good for small, independent and indigenous companies, says Sunny Oputa, CEO of Energy & Corporate Africa. (Image source: simon morris/FreeImages)The oil and gas potential of the West Africa region is among the best in the world, according to some experts in the sector who advocate optimal exploitation and deployment of advanced technologies in the region

Keith Millheim, a director at Atlantis Offshore, said that small offshore oilfields in West Africa, if exploited properly, could become the next big economical play, adding that “all it takes is one adventurous company to set the ball rolling.”

Drawing a comparison with the North Sea, he said, “Entrepreneurs such as the US-based Hamilton Brothers learned how to make small fields in the North Sea economical in the mid-1970s, specifically the Argyle field off the coast of Scotland that brought Great Britain its first oil. The company’s game-changing technology was the first floating production storage and offloading vessel deployed for oil production. It changed the offshore industry forever.” Millheim added that with its small offshore oilfields, West Africa could be the next North Sea scenario.

Millheim also thinks that the total reserves in the small oilfields could be more than the reserves in the large oilfields. “Many fields are capable of producing 8,000 to 20,000 barrels of oil a day. If you can do it economically, it’s a company maker,” he said.

According to him, countries in Africa are welcoming international investors as most of them have done little to invest in the technology needed to extract their own hydrocarbons. He believes that West Africa’s small oilfields are a rich resource that only needs investors willing to pursue and exploit it.

Sunny Oputa, CEO of Energy & Corporate Africa, a Houston, US-based consultancy, said that the threshold for many major operators is roughly 200-300mn barrels of recoverable oil and that has led many operators, including Royal Dutch Shell and Chevron Corporation to abandon oilfields in Africa that they considered small or marginal.

“They were not worth the economic investment to Shell or Chevron but you know what they say: One man’s meat is another man’s poison,” said Oputa. “These small fields are good for small, independent and indigenous companies. Some wells could produce for 10 to 15 years. They will make money,” he said.

Investors intrigued by Africa’s small offshore fields are often wary of two things. One is the cost and availability of innovative technology that can make exploiting small fields commercially unviable and the other is the fact that many small fields are located in deep waters.

However, unconventional types of technology can be successfully applied to developing small, conventional deepwater oilfields, Millheim explained. “There are service companies and providers that can do it all.”